Shri Dipak Navinchandra Jakhruwala, Surat V. The Income tax Officer,Ward-2(4), Surat

ITA 3158/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6883 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained cash credit; Depreciation; Opportunity of being heard; Principle of natural justice; Peak credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.3158/AHD/2008 A. Y.: 2005-06 SHRI DIPAK NAVINCHANDRA JAKHRUWALA, PROP. JYOTI TEXTILES, 2/2622, 49-50, CHANAN BHAWAN, HINDU GARDEN COLONY, RUDERPURA, SURAT VS THE INCOME TAX OFFICER, WARD -2(4), SURAT PA NO. AALPJ 9866 G (APPELLANT) (RESPONDENT) ITA NO.3306/AHD/2008 A.Y.: 2005-06 THE INCOME TAX OFFICER, WARD -2(4), SURAT VS SHRI DIPAK NAVINCHANDRA JAKHRUWALA, PROP. JYOTI TEXTILES, 2/2622, 49-50, CHANAN BHAWAN, HINDU GARDEN COLONY, RUDERPURA, SURAT PA NO. AALPJ 9866 G (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI M. K. PATEL, AR DEPARTMENT BY SHRI R.K. DHANISTA, DR O R D E R PER BENCH: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST COMMON ORDER OF THE LEARNED CIT(A)-II, SURAT DATED 16-07-2008 FOR ASSESSMENT YEAR 2005-06. ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. BOTH THE APPEALS ARE DECIDED ISSUE WISE AS UNDER. ISSUE NO.1 3. THE ASSESSEE ON GROUND NO.1 OF THE APPEAL CHALLE NGED THE ADDITION OF RS.73,905/- BEING ONE FIFTH OF VEHICLE EXPENSES, INTEREST ON VEHICLE AND DEPRECIATION AND ON GROUND NO.2 THE ASSESSEE CHALLENGED THE ADDITION OF RS.6,395/- BEING ONE FIF TH DISALLOWANCE OF TELEPHONE EXPENSES. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED VEHICLE EXPENSES OF RS.34,476/-, INTEREST ON VEHICL E OF RS.79,551/-, DEPRECIATION OF RS. 2,55,497/- , OFFICE EXPENSES OF RS.22,720/- AND TELEPHONE EXPENSES OF RS.31,956/-. FROM THE DETAILS OF VEHICLE EXPENSES, THE AO NOTED THAT MOST OF THE EXPENSES WE RE INCURRED IN CASH WHICH WERE NOT SUPPORTED BY VOUCHERS. NO SEPAR ATE LOG BOOK IS MAINTAINED, THEREFORE, PERSONAL USER OF THE VEHICLE CANNOT BE RULED OUT. 20% OF THE SAME WAS DISALLOWED AND ADDITION OF RS.73,905/- WAS ACCORDINGLY MADE. FURTHER, 20% OF THE TELEPHONE EXP ENSES WERE DISALLOWED ON THE SAME REASONS. THE LEARNED CIT(A) ON GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE NOTED THAT PERSONAL USER ON THESE FACILITIES I.E. VEHICLE AND TELEPHONE BY THE PROPRIETOR AND HIS FAMILY MEMBERS CANNOT BE RULED OUT, ESPECIALLY WHEN NO RECORDS ARE MAINTAINED. ADDITIONS WERE ACCORDINGLY CONFIRMED. O N CONSIDERATION OF THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN GRO UNDS NO.1 AND 2 OF THE APPEAL OF THE ASSESSEE. THE AO SPECIFICALLY NOT ED THAT VEHICLE EXPENSES ARE NOT SUPPORTED BY VOUCHERS AND WERE INC URRED IN CASH. NO LOG BOOK IS ALSO MAINTAINED. THEREFORE, PERSONAL USER OF THE ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 3 VEHICLE EXPENSES BY THE ASSESSEE AND HIS FAMILY MEM BERS IS NOT RULED OUT. SAME IS THE POSITION REGARDING TELEPHONE EXPENSES. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE THES E GROUNDS AND MERELY SUBMITTED THAT THE ADDITION IS EXCESSIVE. CO NSIDERING THE ABOVE FACTS, WE DO NOT FIND ANY MERITS IN THESE GRO UNDS OF THE APPEAL OF THE ASSESSEE. SAME ARE ACCORDINGLY DISMISSED. ISSUE NO.2 4. THE ASSESSEE ON GROUND NO.3 OF THE APPEAL CHALLE NGED THE ADDITION OF RS.42,660/- ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. THE AO FOUND THAT THE ASSESSEE HAS SHOWN HOUSEHOLD WITH DRAWALS OF RS.71,640/-. THE ASSESSEES FAMILY COMPRISES OF 5 A DULT AND ONE CHILD. THE TOTAL WITHDRAWAL OF DIFFERENT FAMILY MEM BERS WAS RS.1,67,640/-. CONSIDERING THE COST OF LIVING, AS A LSO AREA OR RESIDENCE AND STATUS OF THE FAMILY, THE AO TOOK THE VIEW THAT THE WITHDRAWALS WERE NOT ADEQUATE TO MEET THE DAY TO DA Y EXPENDITURE OF THE FAMILY. THE AO ASKED THE ASSESSEE TO PROVIDE A DETAILED BREAK- UP OF HOUSEHOLD EXPENDITURE BUT THE ASSESSEE WAS UN ABLE TO DO SO. THE AO, THEREFORE, ESTIMATED TOTAL HOUSEHOLD EXPENS ES FOR THE YEAR AT RS.2,10,000/- @ RS.3,000/- PER MONTH PER ADULT M EMBERS AND @ RS.2,500/- PER MONTH PER CHILD AND AFTER THE WITHDR AWALS BY THE ASSESSEE, DIFFERENCE WAS ADDED IN A SUM OF RS.42,36 0/-. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ADDITI ON IS MADE ON MERE ESTIMATE. THE LEARNED CIT(A) HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE ASSESSEE. ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 4 5. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE AO ASKED THE ASSESSEE TO FILE DETAILED BIFURCATION OF THE HOUSEHOLD EXPENDIT URE WHICH WAS NOT FILED AS PER THE QUESTIONNAIRE ISSUED TO HIM. THE A O WAS, THEREFORE, JUSTIFIED IN ESTIMATING THE HOUSEHOLD EXPENDITURE. CONSIDERING THE WITHDRAWALS SHOWN BY THE ENTIRE FAMILY MEMBERS OF T HE ASSESSEE AS AGAINST THE EXPENDITURE ESTIMATED BY THE AO, WE DO NOT FIND THE ADDITION IS UNREASONABLE OR EXCESSIVE. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRODUCE ANY MATERIAL TO CONTROVERT THE FINDINGS OF THE AUTHORITIES BELOW. IN THE ABSENCE OF ANY ARGUME NT FROM THE SIDE OF THE ASSESSEE, THIS GROUND OF APPEAL OF THE ASSES SEE IS DISMISSED. ISSUE NO.3 6. THE ASSESSEE RAISED GROUND NO.4 IN HIS APPEAL WH ICH READS AS UNDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION OF RS.9,73,801/- ON ACCOUNT OF ALLEGED UNEXPLAINED CASH CREDIT AS PROVIDED U/S. 68 OF THE INCOME-TAX ACT , 1961. 7. THE REVENUE RAISED GROUND NO.1 AND 2 IN THE DEPA RTMENTAL APPEAL ON THE SAME ISSUE AND THE SAME READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED I N RESTRICTING THE ADDITION MADE BY THE A. O. OF RS.22,59,572/- TO RS.9,48,166/- [PRINCIPAL AMOUNT O F ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 5 SO-CALLED LOAN REPAYMENT MADE] BEING THE AMOUNT OF CLOSING BALANCE WHICH IS ALSO A PEAK CREDIT IGNORING THE MATERIAL FACT THAT THE REPAYME NT OF SO-CALLED LOAN AMOUNT WAS NOT REPAYMENT DIRECTLY TO THE SO-CALLED CREDITOR, SHRI PRANAV AKSHAY PATEL THROUGH ACCOUNT PAYEE CHEQUE AS REQUIRED U/S. 269T OF THE ACT, BUT, SUCH REPAYMENT WERE MADE TO M/S. SHREE AAG INDUSTRIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-I, SURAT HAS ERRED I N DELETING THE ADDITION OF RS.13,11,406/- [22,59,572 9,48,166] BY RESTRICTING THE ADDITION MADE BY THE A . O. OF RS.22,59,572/-. 8. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE BALA NCE SHEET OF THE ASSESSEE FILED ALONG WITH RETURN OF INCOME REVEALED THAT DURING THE FINANCIAL YEAR UNDER CONSIDERATION, THE ASSESSEE HA D RECEIVED NEW UNSECURED LOANS AS UNDER: (1) PRANAV AKSHAY PATEL RS.22,59,572/- (2) PRANAV SHROFF RS. 25,635/- RS.22,85,207/- THE ASSESSEE DID NOT FURNISH ANY DETAILS OF THESE U NSECURED LOANS, THEREFORE, THESE CASH CREDITS REMAINED UNVERIFIED A ND UNEXPLAINED. THE AO PLACED RELIANCE UPON SEVERAL DECISIONS IN SU PPORT OF THE CONTENTION THAT THE ASSESSEE FAILED TO DISCHARGE ON US LAID UPON HIM TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDI TWORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. ACCO RDINGLY, RS.22,85,207/- WAS HELD TO BE UNEXPLAINED CASH CRED IT U/S 68 OF THE IT ACT AND ADDITION WAS ACCORDINGLY MADE. IT WAS SU BMITTED BEFORE THE LEARNED CIT(A) THAT SHRI PRANAV AKSHAY PATEL IS A SHROFF AND ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 6 SEVERAL TRANSACTIONS WERE CONDUCTED WITH HIM IN A S UM OF RS.22,59,272/- WHICH WERE TREATED AS UNEXPLAINED B Y THE AO. IT WAS SUBMITTED THAT BORROWINGS WERE MADE FORM HIM TO MEE T SHORT TERM MONEY REQUIREMENTS OF THE BUSINESS WHICH WERE RECEI VED THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE HAS TRIED HIS B EST TO OBTAIN CONFIRMATION OF THE TRANSACTIONS FROM THE ABOVE SHR OFF BUT THE ASSESSEE COULD NOT GET THE CONFIRMATION FROM HIM. I T WAS SUBMITTED THAT THE AO COULD HAVE OBTAINED CONFIRMATION FROM H IM DIRECTLY BECAUSE THEY THEMSELVES MAY NOT ENTER THESE TRANSAC TIONS IN THEIR BOOKS OF ACCOUNTS. ON THE OTHER HAND, THE ASSESSEE PROVIDED DETAILS OF CHEQUES AND COPY OF THE BANK STATEMENT TO PROVE THE IDENTITY OF THE SHROFF AND THE CASH CREDIT BUT IT WAS CONSIDERE D AS BOGUS BY THE AO. IT WAS, THEREFORE, SUBMITTED THAT NON-SUBMISSIO N OF THE CONFIRMATION FROM THE SHROFF/CREDITORS CANNOT BE TR EATED AS UNEXPLAINED CREDIT. IN THE ALTERNATIVE CONTENTION I T WAS SUBMITTED THAT THE AO SHOULD HAVE TAXED THE PEAK CREDIT AND NOT TH E TOTAL CREDITS/DEPOSITS. THE STATEMENT WAS FILED TO SHOW T HAT PEAK CREDIT IS RS.9,48,166/- WHICH COULD HAVE BEEN ADDED AS AGAIN ST THE TOTAL ADDITION OF RS.22,85,207/-. THE LEARNED CIT(A) CONS IDERING THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE ADDITION TO RS.9,73,801/- (RS.9,48,166 + RS.25,635/-) AND DIRECTED THE AO TO GRANT RELIEF OF RS.13,11,406/-. THE FINDINGS OF THE LEARNED CIT(A) IN PARA 14 TO 14.2 ARE REPRODUCED AS UNDER: 14. I HAVE CAREFULLY CONSIDERED THE VIEW TAKEN BY THE AO, AS ALSO THE SUBMISSIONS OF THE AR. I FIND THAT THE AO TREATED THE SUM OF RS.22,85,207 AS UNEXPLAINED ON T HE GROUND THAT NO CONFIRMATION WAS FILED FROM THE ALLE GED ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 7 CREDITOR. OUT OF THE SUM OF RS.22,85,207 THE AR HAS NOT CONTESTED THE SUM OF RS.25,635 AND HAS FOCUSED HIS ATTENTION ONLY ON RS.22,59,572. FROM THE COPIES OF THE LEDGER ACCOUNT OF PRANAV AKSHAY PATEL, THE SHROFF I N THE BOOKS OF THE ASSESSEE, I FIND THAT ALL THE TRANSACT IONS, BOTH DEBITS AND CREDITS WERE BY MEANS OF ACCOUNT-PA YEE CHEQUES. THE STATEMENT OF TRANSACTIONS SEPARATELY FURNISHED BY THE AR ALSO CONFIRMS THIS FACT. IF THA T WAS THE POSITION, THERE COULD NOT HAVE BEEN ANY SCOPE FOR A NY UNACCOUNTED TRANSACTION OR ANY TRANSACTION BEING KE PT OUTSIDE THE BOOKS OF ACCOUNT OR UNEXPLAINED. 14.1 WHAT IS ALSO TO BE APPRECIATES IS THE FACT THA T THESE TRANSACTIONS WERE ENTERED INTO BY THE ASSESSEE WITH A SHROFF I.E. A MONEY-LENDER. A MONEY-LENDER WILL NEV ER GIVE A CONFIRMATION IN WRITING SINCE WHAT HE DOES IS TO CIRCULATE MONEY. HE OFTEN TAKES IN CASH FROM ONE PARTY TO GIV E A LOAN IN CHEQUE TO ANOTHER, THEN RECEIVES THE LOAN B ACK IN CHEQUE, AND RETURNS THE SUM IN CASH TO THE ORIGINAL LENDER. IT IS ALSO TO BE FURTHER NOTED THAT THE SUM OF RS.22,59,572 WAS NOT THE CREDIT BALANCE AT THE END OF THE YEAR. THE BALANCE WAS ONLY RS.9,48,166 WHICH WAS CARRIED FORWARD TO THE NEXT YEAR. WHAT THE AO DID W AS TO TOTAL ALL THE DEPOSITS OR CREDITS IN THE ACCOUNT OF SHROFF WHICH REPRESENTED BORROWINGS FROM THE SHROFF. THROU GH OUT THE YEAR, THE TOTAL DEPOSITS WAS RS.22,59,572, WHICH THE AO TREATED AS UNEXPLAINED CASH CREDIT, AND THUS COMMITTED A BASIC ERROR SINCE, THE CLOSING BALANCE OF THE ACCOUNT OF THE SHROFF IN THE BOOKS OF ASSESSEE WAS DULY RS.9,48,166. THE AR HAS ARGUED WITHOUT PREJUDICE TH AT THE CLOSING BALANCE OF RS.9,48,166 BEING THE PEAK C REDIT COULD AT BEST BE TREATED AS UNEXPLAINED CASH CREDIT IN TERMS OF SEC. 68, AND ADDED TO THE ASSESSEES TOTAL INCOME. 14.2 THE AR HAS ARGUED THAT THE AO COULD HAVE UTILI SED HIS POWERS UNDER THE ACT TO ASCERTAIN THE IDENTITY OF SHRI PATEL AND ALSO HIS CREDITWORTHINESS SINCE, THE ASSE SSEE WAS UNABLE TO DO SO ON HIS OWN. THIS CONTENTION IS NOT REALLY ACCEPTABLE. THIS IS BECAUSE, ONCE THE ASSESS EE ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 8 HAD MADE A CLAIM AND HAD SHOWN THE SAID ENTRY IN HI S BOOKS, THE INITIAL BURDEN LAY ON HIM TO PROVE EVIDE NCE OF THE IDENTITY OF THE ALLEGED CREDITOR, HIS CREDITWOR THINESS, AS ALSO GENUINENESS OF THE TRANSACTIONS. IN THIS PARTI CULAR CASE, EVEN THOUGH THE TRANSACTIONS HAD BEEN SHOWN, YET THE IDENTITY OF THE ALLEGED CREDITOR HAD NOT BEEN ESTABLISHED NOR HAD HIS ADDRESS BEEN PROVIDED. CONSEQUENTLY, HIS CREDITWORTHINESS WAS ALSO NOT PRO VED. IT WAS ALSO NOT PROVED THAT SHRI PRANAV A. PATEL IS ACTUALLY A SHROFF OR A MONEY-LENDER. GIVEN SUCH FACTS, I AM OF THE VIEW THAT THE AO WAS FULLY JUSTIFIED IN TREATING TH E TRANSACTIONS AS UNEXPLAINED. HOWEVER HE ERRED IN AD DING ALL THE CREDITS I.E. THE BORROWINGS AND TREATING TH E TOTAL SUM OF RS.22,59,572 AS THE UNEXPLAINED CASH CREDIT. HE IS DIRECTED TO TREAT ONLY THE CLOSING BALANCE OF RS.9,48,166, WHICH WAS ALSO THE PEAK CREDIT, AS THE UNEXPLAINED CASH CREDIT IN TERMS OF SEC. 68 OF THE IT ACT. THUS, TH4E ADDITION WOULD BE RESTRICTED TO RS.9,48, 166 + RS.25,635 (WHICH HAS NOT BEEN CONTESTED BY THE AR) = RS.9,73,801/-. THE ASSESSEE THEREFORE, WOULD GET A RELIEF OF RS.13,11,406. THE AO IS DIRECTED TO TAKE ACTION ACCORDINGLY. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBM ITTED THAT THE LEARNED CIT(A) RIGHTLY APPLIED THE THEORY OF PEAK C REDIT FOR THE PURPOSE OF MAKING THE ADDITION OF RS.9,73,801/-. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDER OF THE AO AND THE GROUNDS OF APPEAL RAISED IN THE DEPARTMENTAL APPEAL AND SUBMIT TED THAT THEORY OF PEAK CREDIT IS NOT APPLICABLE IN THIS CASE IGNORING THE MATERIAL FACT THAT THE REPAYMENT OF THE SO-CALLED LOAN AMOUNT WAS NOT REPAYMENT DIRECTLY TO THE CREDITOR SHRI PRANAV AKSHAY PATEL B UT SUCH REPAYMENTS HAVE BEEN MADE TO M/S. SHREE AAG INDUSTRIES. THE LE ARNED DR ON GOING THROUGH THE STATEMENT OF LEDGER ACCOUNT OF TH E ABOVE CREDITOR ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 9 SUBMITTED THAT THE ALLEGED PEAK OF RS.9,48,166/- IS THE CLOSING BALANCE IN THIS ACCOUNT WHICH CANNOT BE TREATED AS PEAK CREDIT. THE LEARNED DR, THEREFORE, SUBMITTED THAT THE LEARNED C IT(A) SHOULD NOT HAVE DELETED THE ADDITION OF RS.13,11,406/-. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED ABOVE ARE N OT IN DISPUTE. THE ASSESSEE IN THE ASSESSMENT YEAR UNDER APPEAL RECEIV ED NEW UNSECURED LOANS FROM SHRI PRANAV AKSHAY PATEL AND S HRI PRANAV SHROFF. THE ASSESSEE DID NOT FURNISH ANY DETAILS AN D EVIDENCE BEFORE THE AO TO PROVE THE IDENTITY OF THE CREDITORS, CAPA CITY OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. BEFORE THE LEARNED CIT(A) THE ASSESSEE DID NOT CHALLENGED THE ADDITION OF UNEXPLAINED CASH CREDIT IN RESPECT OF SHRI PRANAV SHROFF IN A S UM OF RS.25,635/-. TO THAT EXTENT, THERE IS NO CHALLENGE EVEN BEFORE U S. THE ASSESSEE ONLY CHALLENGED THE ADDITION OF UNEXPLAINED CREDIT IN RESPECT OF SHRI PRANAV AKSHAY PATEL IN A SUM OF RS.22,59,572/- BEFO RE THE LEARNED CIT(A). EVEN BEFORE THE LEARNED CIT(A) NO CONFIRMAT ION OR OTHER EVIDENCE WAS FILED TO PROVE THE IDENTITY OF THE CRE DITORS, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CRE DITORS. THEREFORE, THE LEARNED CIT(A) CONFIRMED THE ADDITION IN PRINCI PLE. THE LEARNED CIT(A) HOWEVER, NOTED IN THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT SHROFF IS A MONEY LENDER AND THEY NEVER GIVE C ONFIRMATION AND IN THE ACCOUNT OF THE ABOVE SHROFF THERE WAS BALANCE O F RS.9,48,166/- TO BE CARRIED FORWARD TO THE NEXT YEAR. BUT IN THE OPE RATIVE PORTION OF THE ORDER, THE LEARNED CIT(A) NOTED THAT IT WAS ALSO NO T PROVED THAT SHRI PRANAB AKSHAY PATEL ACTUALLY A SHROFF OR A MONEY LE NDER. THE LEARNED ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 10 CIT(A) SUSTAINED THE ADDITION OF RS.9,48,166/- CONS IDERING IT TO BE PEAK CREDIT WHICH WAS ONLY CLOSING BALANCE ON THE END OF THE YEAR (RS.23,53,166 RS.14,05,000). THUS, THE LEARNED CI T(A) GAVE A CONTRADICTORY FINDING IN THE IMPUGNED ORDER. THE RE VENUE DEPARTMENT IN THE GROUND OF APPEAL SPECIFICALLY NOTED THAT THE ORY OF PEAK IS WRONGLY APPLIED IGNORING THE MATERIAL FACT BECAUSE REPAYMENT OF THE SO-CALLED LOAN WAS NOT REPAYMENT DIRECTLY TO SHRI P RANAV AKSHAY PATEL BUT REPAYMENT WAS MADE TO M/S. SHREE AAG INDU STRIES. THIS FACT WAS NOT VERIFIED BY THE LEARNED CIT(A) BEFORE APPLYING PEAK THEORY IN THE MATTER. FURTHER, PEAK THEORY WAS NOT SUBMITTED BEFORE THE AO BECAUSE THE ASSESSEE CLAIMED GENUINENESS OF THE CASH CREDITS IN THE MATTER. THUS, THE STATEMENT FILED BE FORE THE LEARNED CIT(A) CLAIMING PEAK THEORY WAS ALSO NOT FILED BEFO RE THE AO FOR HIS CONSIDERATION. THE LEARNED CIT(A) BEFORE ACCEPTING THE NEW PLEA IN THE ALTERNATIVE CONTENTION RAISED BEFORE HIM ON PE AK THEORY SHOULD HAVE OBTAINED REMAND REPORT FORM THE AO BEFORE GRAN TING PART RELIEF TO THE ASSESSEE. THE LEARNED CIT(A) HOWEVER, FAILED TO DO SO AND VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE M ATTER. IN ORDER TO ADJUDICATE UPON THE PLEA OF PEAK CREDIT FACTUAL FOU NDATION HAS TO BE LAID BY THE ASSESSEE AND HE HAS TO OWN ALL THE CASH CREDIT ENTRY IN THE BOOKS OF ACCOUNT, BUT THE ASSESSEE DID NOT RAISE AN Y SUCH PLEA BEFORE THE AO AT THE ASSESSMENT STAGE. THIS FACT WO ULD SHOW THAT THE LEARNED CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE F OR APPLYING PEAK THEORY ON THE MATTER IN ISSUE WITHOUT CONFRONTING T HE MATERIAL TO THE AO. THEREFORE, WHATEVER RELIEF IS GRANTED BY THE LE ARNED CIT(A) CANNOT BE SUSTAINED AND THE MATTER REQUIRES RECONSI DERATION AT THE LEVEL OF THE AO. FURTHER, THE LEARNED CIT(A) MAINTA INED ADDITION OF ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 11 RS.9,73,801/- ON WHICH THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE THE APPEAL. ON THIS AMOUNT, THE ASSESSEE PRAC TICALLY ADMITTED BEFORE THE LEARNED CIT(A) THAT SUCH ADDITION COULD BE MAINTAINED. EVEN ON THIS AMOUNT, NO CONFIRMATION OR OTHER EVIDE NCE WAS FILED TO PROVE GENUINE CASH CREDIT. SINCE THE ADDITION OF AB OVE AMOUNT IS MADE BY THE LEARNED CIT(A) ON ADMISSION OF THE ASSE SSEE, THEREFORE, THERE APPEARS NO GRIEVANCE OF THE ASSESSEE ON THE A DDITION SUSTAINED BY THE LEARNED CIT(A) IN A SUM OF RS.9,73,801/-. AC CORDINGLY, GROUND NO.4 OF THE APPEAL OF THE ASSESSEE IS LIABLE TO BE DISMISSED BEING THE APPEAL NOT MAINTAINABLE ON SUCH ISSUE. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE, WE SET ASIDE THE PART OF THE ORDER OF THE LEARNED CIT(A) GRANTING RELIEF TO THE ASSESSEE IN A SUM OF RS.13,11,406/- BY APPLYING PEAK THEORY IN THE MATTE R AND SUCH MATTER IS RESTORED TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THE ISSUE IN ACCORDANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS AT LIB ERTY TO RAISE PLEA BEFORE THE AO ON THE MATTER IN ISSUE. IN THE RESULT , GROUND NO.4 OF THE APPEAL OF THE ASSESSEE IS DISMISSED AND GROUNDS NO. 1 AND 2 OF THE APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL P URPOSES. 11. NO OTHER POINT IS ARGUED OR PRESSED. ITA NO.3158 AND 3306/AHD/2008 SHRI DIPAK NAVINCHANDRA JAKHRUWALA 12 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED IN ALL THE GROUNDS WHEREAS THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08-04-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-04-2011 LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/ LAKSHMIKANT/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD